Egyptian army to host unity talks as crisis deepens

CAIRO (Reuters) - Egypt’s army chief will host national unity talks on Wednesday, seeking to end a growing political and economic crisis in the Arab world’s most populous nation.

The meeting scheduled for 1430 GMT was called in response to a wave of protests since President Mohamed Mursi awarded himself sweeping powers on November 22 to push through a new constitution shaped by his Islamist allies, which is due to go to a referendum on Saturday.

“We will not speak about politics nor about the referendum. Tomorrow we will sit together as Egyptians,” armed forces chief and Defense Minister Abdel Fattah al-Sisi said at a gathering of army and police officials on Tuesday.

Mursi and the Muslim Brotherhood, which propelled him to power in a June election, were expected to attend, while the main opposition coalition said it would decide on Wednesday morning whether to participate. The opposition stayed away from an earlier reconciliation meeting called by Mursi last weekend.

The judiciary committee overseeing the vote decided late on Tuesday that the referendum would be conducted on two days instead of one, as previously planned.

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“The committee had officially asked the President to issue a law approving that the referendum takes place on two stages on Saturday December 15 and Saturday December 22,” Judge Mahmoud Abu Shousha, a member of the referendum judiciary committee, said. Voting for Egyptians living abroad starts on Wednesday.

“The reason for the splitting of the vote into two stages is due to a shortage of judges needed to supervise the ballot stations,” another member of the committee, who asked not to be named, said.

Many judges had decided in a joint meeting on Tuesday to not supervise the vote on a constitution they say had divided the country into two groups.

Outside the presidential palace - where anti-Mursi protesters are demanding the Islamist postpone the vote on a constitution they say does not represent all Egyptians - there was skepticism tinged with some hope.

“Talks without the cancellation of the referendum - and a change to the constitution to make it a constitution for all Egyptians and not the Brotherhood - will lead to nothing and will be no more than a media show,” said Ahmed Hamdy, a 35-year-old office worker.

Egypt's President Mohamed Mursi (2nd R) meets with Abou Elela Mady (R), head of the moderate Wasat Party, and Sayed el-Badawi (2nd L), the head of the Wafd party, at the presidential palace in Cairo December 10, 2012. Egypt's Islamist president has given the army temporary power to arrest civilians during a constitutional referendum he is determined to push through despite the risk of bloodshed between his supporters and opponents accusing him of a power grab. REUTERS/Egyptian Presidency/Handout

But the fact that the army was calling such talks “is an indication to all parties that the crisis is coming to a head and that they need to end it quickly”, he said.

Earlier, Finance Minister Mumtaz al-Said disclosed that a $4.8 billion International Monetary Fund loan, a cornerstone of Egypt’s economic recovery hopes, would be delayed until next month because of the crisis.

The delay was intended to allow time to explain a widely criticized package of economic austerity measures to the Egyptian people, Said told Reuters.

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REBUILD CONSENSUS

Prime Minister Hisham Kandil said the measures would not hurt the poor. Bread, sugar and rice would not be touched, but prices of cigarettes and cooking oil would go up and fines would be imposed for public littering. In a bid to rebuild consensus, he said there would be a public consultation about the program next week.

In Washington, the IMF said Egypt had asked for the loan to be postponed “in light of the unfolding developments on the ground”. The Fund stood ready to consult with Egypt on resuming discussions on the stand-by loan, a spokeswoman said.

On the streets of Cairo, thousands of opposition supporters gathered outside the presidential palace to demand that Mursi postpone Saturday’s referendum.

A bigger crowd of flag-waving Islamist Mursi backers, who want the vote to go ahead as planned on Saturday, assembled at two mosques and remained on the streets as night fell over the Egyptian capital. There were also protests in Alexandria and other cities.

The extended upheaval following the fall of Hosni Mubarak last year is causing concern in the United States, which has given Cairo billions of dollars in military and other aid since Egypt made peace with Israel in 1979.

State Department spokeswoman Victoria Nuland emphasized “deep concerns” over the situation in Egypt and repeated calls on protesters to demonstrate peacefully and on security forces to act with restraint. She declined to be drawn on whether Washington believed the referendum should be postponed.

The latest unrest has so far claimed seven lives in clashes between the Islamist Muslim Brotherhood and the opposition. But the Republican Guard has yet to use force to keep protesters away from the presidential palace, now ringed with tanks, barbed wire and concrete barricades.

Additional reporting by Tamim Elyan and Edmund Blair in Cairo, and Andrew Quinn in Washington; Writing by Giles Elgood; Editing by Michael Roddy